Construction MMI: US construction spending dips in May

by on
Style:
Category:
Metal Prices

The Construction Monthly Metals Index (MMI) rose by 0.9% for this month’s index reading, as U.S. construction spending fell by 0.3% in May from the previous month.

July 2021 Construction MMI chart

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

US construction spending

U.S. construction spending came in at a seasonally adjusted annual rate of $1,545.3 billion in May, the Census Bureau reported earlier this month.

The May rate marked a 0.3% decline from April. However, the rate marked a 7.5% increase from May 2020.

In addition, during the first five months of the year, construction spending totaled $594.8 billion, or up 4.6% year over year.

Private construction spending reached a seasonally adjusted annual rate of $1,203.3 billion, or down 0.3% from April. Meanwhile, residential construction reached a rate of $751.7 billion in May, or up 0.2%. Nonresidential construction fell 1.1% to $451.6 billion in May.

As for public construction, estimated spending reached $342.0 billion, or down 0.2%. Educational construction fell 1.9% to $82.0 billion. Highway construction rose 1.4% to $98.6 billion.

Housing starts pick up in May

Meanwhile, U.S. housing starts rose by 3.6% in May to a seasonally adjusted annual rate of 1.57 million, the Census Bureau reported last month.

Single‐family housing starts reached a rate of 1.10 million, or up 4.2%. In addition, the May rate for units in buildings with five units or more reached 465,000.

Privately owned housing units authorized by building permits fell 3.0% in May to a rate of 1.68 million.

ABI increases in May

The Architecture Billings Index, released monthly by the American Institute of Architects, posted an index value of 58.5 for May, up from 57.9 the previous month. (Any index value greater than 50 indicates billings growth.)

Meanwhile, the design contracts index checked in at 63.2, up from 61.7 in April.

“The score of 58.5 for the month (any score over 50 indicates billings growth) is one of the highest ever reported, and indicates that even more firms reported an increase in their billings in May than in April,” the ABI report indicated. “In addition, significant work remains in the pipeline, with inquiries into new projects remaining very high, and the value of new design contracts rising further to a new all-time high in the 11-year history of that index.”

However, the report notes architecture firms’ concerns over inflation’s impact on materials costs.

“The latest data from the Bureau of Labor Statistics shows that the Producer Price Index (PPI) for final demand, a measure of inflation, increased by 0.8% in May, and is up by 6.6% from one year ago,” the report continued. “The construction industry continues to see an even larger impact, with the PPI for materials and components for construction increasing by 3.9% in May alone, and by 17.0% from May 2020. While lumber prices have finally started to stabilize, steel prices are continuing to rise.”

Construction employment down in June

As for labor in the sector, construction employment fell by 7,000 jobs in June, the Associated General Contractors of America (AGCA) reported.

Construction employment remains down by 238,000 jobs compared with before the onset of the COVID-19 pandemic.

“It is hard for the industry to expand when it can’t find qualified workers, key building materials are scarce, and the prices for them keep climbing,” AGCA CEO Stephen E. Sandherr said. “June’s job declines seem less about a lack of demand for projects and a lot more about a lack of supplies to use and workers to employ.”

Actual metals prices and trends

The Chinese rebar price fell by 5.0% month over month to $762 per metric ton. Furthermore, Chinese H-beam steel fell by 3.7% to $785 per metric ton.

Meanwhile, the U.S. shredded scrap steel price rose by 11.8% to $503 per short ton.

European commercial 1050 aluminum sheet gained by 2.0% to $3,649 per metric ton.

With volatile steel markets, knowing which strategy to execute and when can make all the difference. See how MetalMiner looks at different market scenarios.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.